Trump reveals his ‘great’ pick for US central bank boss
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Donald Trump has revealed his pick to become the world’s most powerful central banker, insisting Kevin Warsh “may be the best” ever.
Mr Warsh, a former member of the Federal Reserve’s board of governors, will “never let you down” as chair the country’s central bank, the president said in a Truth Social post.
It ends months of speculation on whether he would choose a puppet to force through US interest rate cuts.
Rumours around his potential appointment played out on financial markets overnight and contributed to a strengthening of the Trump-hit dollar and downwards shifts in many dollar-priced commodities such as gold and oil.
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Mr Warsh , while widely seen as an advocate of interest rate cuts demanded by the president to boost economic growth, has also spoken of the need to shrink the Fed’s balance sheet.
Such a policy is supportive of higher interest rates and helps balance his possible policy approach.
The market reaction suggests that Mr Trump’s pick is not seen as the champion for interest rate cuts that investors had feared, potentially eroding concerns about the independence of the Federal Reserve.
The appointment is important globally because the fate of the world’s largest economy has ramifications for everything in the financial system.
The central bank is a crucial balancing tool – especially in an era of high uncertainty and most of that emanating from the United States itself.
A new Fed chair is needed because its incumbent is due to stand down in May after two terms.
President Trump appointed Jap Powell during his first stint in the White House but he has long criticised the Fed under Mr Powell’s leadership and threatened to fire him on many occasions.
Mr Powell is currently the subject of a Department of Justice investigation into Fed renovation costs – an inquiry Mr Powell has dismissed as being part of the Trump administration’s efforts to influence decisions by securing a voting majority on its rate-setting panel.
The political row has seen both Democrats and Republicans on the Senate’s influential banking committee come out in support of Mr Powell.
It is the same committee that is now tasked with saying yea or nay to Mr Warsh’s appointment.
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